The Study On Approach Of Commercial Bank Valuation Based On Economic Value Added

Finance is the lifeblood of the economy in which the state plays a pivotal role in the economy as a whole. Since the 1990s, banks have experienced a debt management and asset management. Nowadays the Value Management has been the main way. Western Commercial Bank of practitioners, academics, regulators has shown a keen interest in shareholder value. Banking shareholder value maximum has become an effective regulator inspected by the bank performance indicators.1.The meaning of this subjectFrom the overall development of China's banking sector, the ongoing commercial banks to improve corporate governance structure, strengthen internal controls, add value and improve risk prevention system to create a new round of system reform as the main contents and management innovation. China has completed initial shareholding system reform at the same time, clearly pointed out operating principles that is maximizing the value of a bank. And the evaluation is a prerequisite for maximizing the value. And the present values of commercial banks follow with the relevant documents or evaluation of the price-earnings ratio and earnings per share to estimates issue price of stock. Therefore, value strategies are very important for management of banks.In addition, the Chinese bank market fully opened up in December 2006, we need to establish a management system for international competition. Since China joined WTO, the domestic financial industry appeared thriving scene. One hand many foreign banks came into china, such as HSBC, Standard Chartered bank,Citi bank,etc. The other hand, with the development of China's financial system, the four major state-owned commercial banks went to the stock market. Foreign capital coming into the banking sector, the mergence between commercial banks and the purchase of assets to be sold, restructuring and the acquisition of shares of capital assets are also becoming more frequent. Due to the nature of commercial banking enterprise, business and assets constitute, the traditional cost will cause larger deviations to evaluate the commercial banking enterprise. Because the capital market law and the existence of government intervention and market restrictions on the number of samples, market method is not feasible for commercial banks. Economic Value Added (EVA) is enterprise valuation methods, as the first international evaluation of the performance indicators, are widely used in China. For example: China Construction Bank branch at all levels from top to bottom on the provisions adopted EVA as a performance evaluation of staff. With the widely use of EVA concept in the management of enterprises and the promotion of investment analysis and application, enterprise value Based on the EVA model of enterprise value (EVA valuation model with the following) has been developed. EVA has the advantage of being able to make full use of all public information to make a more comprehensive evaluation. The results reflect more real and the influence of capital costs has been rejected. So different capital structure of enterprises in the same basis can compare with each other.2.Arrangment and main contentsThe article is divided into four parts. The first part makes an overview assessment of the enterprise value which is the theoretical basis of the full text. The second part introduces the special aspects of China's commercial banks .First, the paper gives the value of commercial banks a clear position; Secondly, this paper make a comparison with book value, market, income (discounted cash flow) longitudinal and get a conclusion that market method and book value are not suitable for value assessment of commercial bank. The EVA is better than market method and book value. At the same time, the EVA is also better than Dividend shares discount and cash flow method. The third part constructs the commercial banks value assessment model on the basis of EVA valuation. At last, Paper does a case study which makes Shenzhen Development Bank co., LTD. as an example. It uses EVA model, Dividend shares discount and cash flow method respectively and reached the same conclusion as before.